Tyler and Travis formed the equal T&T Partnership during the current year, with Tyler contributing $300,000 in cash and Travis contributing land (basis of $120,000, fair market value of $160,000) and inventory (basis of $30,000, fair market value of $140,000). Travis recognizes no gain or loss on the contribution and his basis in his partnership interest is $150,000.

Question

Quizplus · Accepted Answer

Travis's basis in his partnership interest is calculated as follows:

Contribution of land (basis of $120,000, fair market value of $160,000): Basis carries over to partnership interest = $120,000
Contribution of inventory (basis of $30,000, fair market value of $140,000): Basis carries over to partnership interest = $30,000
Total basis in partnership interest = $120,000 + $30,000 = $150,000 (as given in the problem)

Since Travis recognizes no gain or loss on the contribution, his basis in his partnership interest is the same as when he contributed the assets.

Tyler and Travis Formed the Equal T&T Partnership During the Current